Accounts Receivable (AR) – End-to-End Process

 Accounts Receivable (AR) – End-to-End Process

Accounts Receivable plays a critical role in maintaining an organization’s cash flow and financial health. Below is a simplified view of the end-to-end AR cycle:

🔹 1. Customer Onboarding & Credit Assessment
• Customer master creation
• Creditworthiness check & credit limit approval
• Payment terms finalization

🔹 2. Sales Order Processing
• Receipt of customer order
• Order validation against credit limits
• Order confirmation

🔹 3. Goods Delivery / Service Completion
• Dispatch of goods or completion of services
• Proof of delivery (POD) or service confirmation

🔹 4. Invoice Generation
• Invoice creation as per agreed terms
• Tax calculation & compliance (GST/VAT)
• Invoice dispatch to customer

🔹 5. Accounts Receivable Accounting
• Invoice posting in ERP
• Customer ledger update
• Aging report generation

🔹 6. Collections Management
• Follow-ups on due invoices
• Customer communication & dispute handling
• Collection strategies as per aging

🔹 7. Cash Application
• Receipt of payment (bank/cheque/online)
• Payment matching with invoices
• Short / excess payment handling

🔹 8. Deductions & Dispute Resolution
• Investigation of deductions
• Coordination with sales/logistics
• Credit note issuance (if required)

🔹 9. Reconciliation & Reporting
• Customer account reconciliation
• AR aging analysis
• Month-end closing & reporting

🔹 10. Bad Debt Provision / Write-off (if applicable)
• Evaluation of doubtful debts
• Management approval
• Write-off posting

📌 Efficient AR management improves:
✔ Cash flow
✔ Working capital
✔ Customer relationships
✔ Financial accuracy